J.P. Morgan ChaseJPM-0.74% & Co. sent a letter to Bloomberg LP this week asking that the financial news and information company show logs of all staff members since 2008 who used the company's data terminals to search activities of J.P. Morgan subscribers.

J.P. Morgan Chase sent a formal demand letter to Bloomberg this week, asking the company to show logs of all staff members who searched activities of J.P. Morgan subscribers since 2008. Aaron Lucchetti reports on MoneyBeat. Photo: Getty Images.

The letter, sent to a senior Bloomberg executive, also asks for the roles of the people who ran each query and asks for confirmation that Bloomberg employees have discontinued any inappropriate access.

Bloomberg is scrambling to repair any potential damage to its reputation after clients such as Goldman Sachs Group Inc.GS-1.03% and J.P. Morgan expressed concern that information about their employees' use of Bloomberg terminals was used in the Bloomberg news-gathering process.

J.P. Morgan's move may be the first formal action taken by a Wall Street firm since Bloomberg journalists' use of the data came to light last week and could blaze a path for other firms to follow.

Other banks, including Morgan Stanley,MS-1.17% have held dialogues with Bloomberg officials, including Chief Executive Daniel Doctoroff, according to people familiar with the matter.

Mr. Doctoroff reached out to Morgan Stanley executives and has been in touch in recent days with Thomas Nides, the firm's vice chairman.

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Traders work at Bloomberg terminals on the floor of the New York Stock Exchange on Monday.
Reuters

"They're assuring customers this was a mistake and that they're going to rectify that," Mr. Nides said on Wednesday. "We want to make sure we have all the facts, but right now we're taking the company's assurances" that the issues with use of customer data didn't extend to trades or instant-message conversations, Mr. Nides added.

Bloomberg declined to comment on specific conversations with customers.

While Bloomberg faces one of its biggest challenges, its data terminals, which cost about $20,000 a year, have become deeply entrenched on Wall Street—and difficult for clients to give up.

"It's hard to extricate yourself from the terminal," said one senior Wall Street official.

Bloomberg terminals, for traders, are virtual ecosystems on which they can negotiate contracts, research currencies or read a restaurant review.

Most financial workers, from bankers and traders to regulators, need only some of the terminal's thousands of screens.

The system is priced much like cable television in that clients pay for the whole package even if they use only a small portion of the service

What's more, the terminal's presentation is out of date—and that is a virtue, experts said.

Functions are accessed by keystrokes rather than mouse-clicks and require users to invest time learning all the nooks and crannies, making it that much more difficult for them to replace it.

Since the New York company was founded by New York City Mayor Michael Bloomberg in 1982, its data terminals have seized a growing share of the lucrative market for financial information.

Bloomberg in 2012 surpassed rival Thomson Reuters to become the largest financial-data provider in the world.

Dow Jones and The Wall Street Journal compete with Bloomberg and Thomson Reuters on business and financial news.

Goldman uses about 5,000 Bloomberg terminals. Overall, Bloomberg said there are about 315,000 terminals in use, up from 258,000 at the end of 2007.

But some major Wall Street firms have grown concerned about their dependence on Bloomberg for communicating to other traders and because it stores so much data on what Wall Street firms do.

Goldman, in particular, has been wary of the data Bloomberg collects, according to people familiar with the matter.

Among its concerns is that Bloomberg employees can mine emails and other communications to help gather market intelligence.

Other Wall Street traders have expressed concerns that sensitive topics, such as looking for another job, would become publicly available through their use of the Bloomberg terminal.

Last year, J.P. Morgan confronted Bloomberg reporters as the news service reported on the bank's "London whale" trading fiasco, saying that some reporters were monitoring log-ins of certain figures involved in the episode, said a person close to the bank.

A Bloomberg spokesman said, "We have no record of any complaint from them at that time."

"Our legal department sent a formal request to Bloomberg to verify exactly what information reporters had access to and for confirmation of its controls to prevent future breaches," said J.P. Morgan spokesman Joe Evangelisti.

Last week, Bloomberg said it had restricted its journalists from accessing information about terminal subscribers, including when they last logged on, when they subscribed and how often they accessed features like news or the chat function.

Some companies, such as Goldman, are pushing Bloomberg to do a more thorough search of how journalists within its news division use different types of information.

Bloomberg previously said it had appointed Steve Ross, a senior executive responsible for the day-to-day operations of its terminals business, as its first dedicated compliance chief.

In a television interview Tuesday, Goldman executive Gary Cohn said he had been in frequent touch with Mr. Doctoroff, but added he wanted more answers for how the company's data are stored and used at Bloomberg.

"I'd rather get the truth than have them tell us things they're not 100% confident in," Mr. Cohn told CNBC Tuesday.

Some traders on Wall Street have said privately in recent days that the big banks could try to start a cooperative that would compete on price with Bloomberg.

But others say that there is no immediate alternative on the horizon, despite Thomson Reuters's push in recent years to compete more.

Kevin O'Keefe, an analyst with investment firm Brown Advisory Inc., said he has no plans to change because of the privacy concerns. "It's so easy to use... and they come up with a new function every five minutes," he said. "It doesn't matter what they charge."

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